The Philippines' Department of Energy (DOE) will launch a dedicated Green Energy Auction in 2027 aimed at replacing diesel generation on off-grid islands with renewable energy and battery storage systems, targeting lower electricity costs and reduced reliance on nationwide consumer subsidies, local media reported on August 5.

Many remote islands served by state-owned National Power Corporation (NAPOCOR) still depend on diesel-fired plants, with generation costs averaging 18 pesos/kWh ($0.29/kWh) and reaching as high as 62 pesos/kWh in some areas due to fuel transport expenses, DOE Undersecretary Rowena Cristina Guevara said.

The difference between regulated tariffs and actual generation costs is covered by the Universal Charge for Missionary Electrification, a subsidy collected from electricity consumers nationwide to support off-grid areas.

The initial auction will cover 20 of the country's larger NAPOCOR-served islands. The DOE has held focus group discussions with renewable energy developers, local government units and other stakeholders to refine the auction design.

Unlike previous renewable energy auctions, the off-grid program will be tailored to the operating conditions of island communities. NAPOCOR will continue providing uninterrupted electricity service during the transition while winning developers build and commission their renewable energy facilities. The department said it is finalizing the list of eligible islands and auction parameters ahead of the rollout next year.